Transcript PD-22- Burry - Institut canadien des actuaires

Canadian
Institute
of
Actuaries
L’Institut
canadien
des
actuaires
2009 Annual Meeting ● Assemblée annuelle 2009
Halifax, Nova Scotia ● Halifax (Nouvelle-Écosse)
2009 Annual Meeting
Assemblée annuelle 2009
Ins and Outs of Health
Insurance Coverage for
Canadians
Dave Burry
President
Travel Insurance Specialists Ltd.
Plan Design Tools
1) Eligibility Criteria
(eliminate the poorest risks).
- Red light versus Green light
- Impacts both premiums and
claims in different magnitudes
(eg. lowers premiums by 1000
but reduces claims by 5000)
A La Carte Eligibility Requirements
1. You must not have:
a) ever been diagnosed with congestive heart failure [CHF];
b) had your most recent coronary artery by-pass or
angioplasty surgery before January 1, 1999;
c) an aneurysm that has not been surgically repaired;
d) had 2 or more of the following: coronary artery by-pass,
coronary angioplasty, stenting, pacemaker insertion or
valve replacement; or
e) been advised by any physician not to travel on your trip.
2. In the past 24 months you must not have:
a) received treatment or taken medication for a terminal
illness;
b) required dialysis; or
c) been prescribed home oxygen.
3. In the past 12 months you must not have been hospitalized
for 24 or more consecutive hours for:
a) abnormal heart rhythm, high blood pressure, blood
clot(s);
b) cardiomyopathy, valvular disease of the heart, valve
replacement, coronary artery disease (including angina),
heart attack (myocardial infarction), stroke or mini-stroke
[TIA]; or
c) chronic lung condition (including emphysema, chronic
bronchitis, chronic asthma or Chronic Obstructive
Pulmonary Disease [COPD]).
4. In the past 12 months you must not have:
a) been prescribed or taken 5 or more medications (including
nitroglycerine in any form) in total (regardless of whether
you used the medications) for one or more of the following
conditions:
- stroke or mini-stroke [TIA] (transient ischemic attack);
- abnormal heart rhythm, high blood pressure, blood
clot(s);
- cardiomyopathy, valvular disease of the heart, valve
replacement, coronary artery disease (including angina),
heart attack (myocardial infarction);
- diabetes;
- diverticulitis, Crohn's disease, ulcerative colitis, chronic
constipation, Irritable Bowel Syndrome [IBS], or any other
chronic bowel disorder;
- kidney (or renal) failure;
- liver disorder, pancreatitis; or
- chronic lung condition (including emphysema, chronic
bronchitis, chronic asthma or Chronic Obstructive
Pulmonary Disease [COPD]);
b) had a coronary angioplasty procedure or stenting;
c) received treatment for metastatic cancer; or
d) had surgery for a heart, lung or gastrointestinal condition
refused or postponed by you or any physician.
Plan Design Tools (cont’d)
2) Plan Selection
- price poorer risks at higher levels
(i.e. match expected claim pattern
with the premium needed to cover
the risk)
- use plan selection criteria that
“pushes” sicker people into higher
priced plans
- how many plans do you need?
A La Carte Underwriting Questions
A. Have you used tobacco products at any time in the last 12 months?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 points
B. Was your last complete medical examination by a physician more than 18 months ago? . . . . . . . . . . . . . . . . . . . . . . .25 points
C. In the last 6 months have you been prescribed or taken any medication for, or as the result of: coronary, vascular
or carotid artery surgery, heart attack (myocardial infarction), coronary artery disease (including angina),
cardiomyopathy, blood clot(s), pericarditis, abnormal heart rhythm? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 points
D. Do you have high blood pressure requiring medication and, in addition, do you have diabetes (including diet
controlled)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 points
E. In the last 12 months, have you:
1) been prescribed or taken cholesterol medication? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 points
2) been prescribed or taken Coumadin (Warfarin)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 points
3) been prescribed or taken, for 30 or more consecutive days, Prednisone (or equivalent steroid medication) in pill
form or Lasix (Novo-Semide/Furosemide)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 points
4) had cancer requiring surgery, chemotherapy, radiation and/or laser therapy (excluding removal of skin lesions)?. . 35 points
5) been prescribed or taken medication for anxiety? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 points
6) received treatment for urinary tract infection [UTI], urinary retention, kidney stones, gallstones or pancreatitis? . . . 15 points
7) had an episode of pneumonia? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 points
8) been prescribed or taken 3 or more medications for high blood pressure (hypertension)? . . . . . . . . . . . . . . . . . . . . 30 points
9) been prescribed or taken 2 or more medications (including inhalers) for a chronic lung condition (including
emphysema, chronic bronchitis, chronic asthma or Chronic Obstructive Pulmonary Disease [COPD])? . . . . . . . . . 30 points
10) been prescribed or taken medication for dementia (including Alzheimer’s Disease)? . . . . . . . . . . . . . . . . . . . . . . . . 40 points
11) had a blood transfusion for anemia? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 points
12) received treatment for syncope or fainting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 points
13) had a gastrointestinal bleed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 points
F. In the last 24 months, have you:
1) been diagnosed with a stroke or mini-stroke [TIA]? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 points
2) been diagnosed with, received treatment for or taken medication for any chronic bowel condition (including
ulcerative colitis, Crohn’s disease, chronic constipation, diverticulitis or Irritable Bowel Syndrome [IBS])? . . . . . . . . 50 points
3) had a bowel obstruction or bowel surgery? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 points
G. Do you have peripheral vascular disease [PVD] (excluding varicose veins and venous stasis)? . . . . . . . . . . . . . . . . . . .40 points
Plan Design Tools (cont’d)
3) Rate Table Construction
- how many age bands
(What is maximum age?)
- higher daily rate by length of trip
(Why?)
- Single trip versus Annual Multi-Trip
- Top-ups (good or bad?)
Travel Insurance Specialists Ltd.
Plan Design Tools (cont’d)
4) Wording for the Policy
- Pre-existing condition coverage




Length of period
Buy down to a lower period
Medication changes
Impact of using “treated” versus “stable”
- Requirement for notification

Must call assistance company within 24 hours
of seeking care (why, how and what happens if
not compliant?)
Travel Insurance Specialists Ltd.
Does the insured understand
the importance of the
“24 hour rule”. . .
Claims
What is so important?
- can they be stopped
- how to mitigate
- payment methods
- managing is the key
- reserving is important too
Travel Insurance Specialists Ltd.
Claims
1. What happens when the answers are
not accurate?
2. How do you find out?
3. Costs incurred – can they be
recovered?
4. Results – deny claim?
– void policy?
– return premium?
– pay only part of the claim?
Travel Insurance Specialists Ltd.
What happens when
the answers on the
application are not
accurate? . . .
…claim denied?
…policy void?
… return of premium?
How to Fix the Loss Ratio?
- reduce who you sell to by eliminating
the poor risks. (easier said than done)
- reduce costs (someone should be willing
to work for less!)
- make it up with volume (If you believe
this, I have some “undervalued” stocks
and real estate to speak with you about).
- much better to reduce claims than to
increase premiums.
Travel Insurance Specialists Ltd.
Fixing the
loss ratio…
…eliminate the
poor risks…
…reduce
costs…
Example
1.
Premium
Expenses
Claims
100%
0%
105%
Solution 1: Increase premiums by 5%
Solution 2: Decrease claims by 5%
2.
Premium
Expenses
Claims
100%
30%
75%
Solution 1: Increase premiums by 7.1%
Solution 2: Decrease claims by 5%
3.
Premium
Expenses
Claims
100%
50%
55%
Solution 1: Increase premiums by 10%
Solution 2: Decrease claims by 5%
Travel Insurance Specialists Ltd.
…other strategies…
…not quite as successful…
Marketplace Differences
CANADA
TOPIC
U.S.A__
Not an issue. . . . . . . . . . . Filing . . . . . . . . . . State by state
Marketplace. . . . . . . . . . .Rates . . . . Technical justification
Marketplace . . . . . . . . . .Benefits . . . . . . . . . . . . Mandated
Scrutinized . . . . . . . . . .Marketing . . . . . . . . . . . .Monitored
Mostly fee for service . . . .Legal . . . . . . . . .Contingent fees
Rarely awarded . . . . . . Damages . . . . . . . . . . . . . . Liberal
Guidelines . . . . . . .Marketing Material . . . . . . . . . . . Filing
Rely on Contract . . . . . . Courts . . . . . . . Consumer friendly
1/10 of U.S. . . . . . . . . . . .Size . .10 times larger than Canada
Licensing
Province . . . . . . . . . . . . .Agents . . . . . . . . . . . . . . . . State
National . . . . . . . . . . . . Carriers . . . . . State (OFC coming?)
Travel Insurance Specialists Ltd.
Marketplace Differences – Claims
Canada
• Coverage is for “Emergency Only”
• Elective treatment excluded
• Claims management is more aggressive
• Claims are re-priced with savings of 25-75%
• Air ambulance used to repatriate to Canada
U.S.A.
• Regulated coverage for most benefits (mandated)
• Claim management highly regulated (bad faith)
• Re-pricing used where possible
• Prompt payment required
Travel Insurance Specialists Ltd.
Premium Differences
Example: Age 73, travelling 180 days
Plan 1 (best price)
1123
Plan 2
1210 (+8%)
Plan 3
1814 (+50%)
Plan 4
2891 (+60%)
Plan 5 (worst price) 4044 (+40%)
Travel Insurance Specialists Ltd.
• Good plan design
• Proper claims management
• Fixing your loss ratio
…will put you
ahead of the competition!
Thank you.
Any questions?
Dave Burry
President
Travel Insurance Specialists Ltd.